In a recent verdict handed down by a court in Tongliang, China, situated near Chongqing, 21 individuals have been convicted for their involvement in an intricate scheme. The scheme pertained to the conversion of proceeds originating from online frauds and unlawful casinos, transacted in Tether (USDT), into Chinese Yuan (RMB). The total of these illicit transfers amounted to about 2.25 billion RMB, which is approximately $307 million.
According to the court’s announcement, two principal defendants, identified by their last names, Jiang and Zheng, were instrumental in enlisting the services of 19 others, often referred to as “money mules.” The documents furnished by the court shed light on the mechanism of their operation. Utilizing a decentralized wallet named Bitpie, bearing resemblance to Metamask in its functionality, the group meticulously funneled the USDT to local peer-to-peer exchange platforms. These platforms specialized in virtual currency trading, allowing them to convert the digital currency into Reminbi seamlessly.
Obfuscation and fictitious transactions
In order to successfully carry out these transfers without raising suspicions, the group demonstrated remarkable astuteness. They dispersed the withdrawals of the fiat currency across several cities nationwide. Moreover, to account for these significant money transfers, they consistently provided fabricated rationales. These justifications ranged from phony project payments to invented workers’ wages. The intention was singular – to ensure the entire process appeared legitimate and above board.
Among the accused, Jiang was identified as having reaped substantial benefits from this operation. He is reported to have amassed a windfall of 22.62 million RMB, equivalent to $3 million. The court’s judgment was unequivocal in its conclusion. The involved parties were deemed culpable for the deliberate act of obfuscating and masking criminal earnings. As a consequence, they have been handed various prison sentences accompanied by fines.
Jiang has been meted out a sentence of six years and three months in addition to a penalty of 500,000 RMB. On the other hand, Zheng, facing charges of similar gravity, has been mandated to serve a prison term of six years. Additionally, he has also been levied with a fine mirroring that of Jiang’s, amounting to 500,000 RMB.
While the court’s disclosure did not specify the origins of this USDT explicitly, it is pertinent to note that Tether stands as a preferred digital asset among fraudulent networks operating predominantly in Southeast Asia. In a publication titled “Number Go Up,” authored by Zeke Faux, a journalist with Bloomberg, the dynamics of these syndicates and their intrinsic reliance on Tether are documented in great detail.